Your Retirement and Why Social Security Reform Is Not the Solution

All throughout the last national election and during the first Bush administration we have been bombarded by political jargon in regards to Social Security. One side wants American taxpayers to have control of their money whether it be within stock options or the current social security program. The other side thinks there is nothing wrong with the current system and that we should leave it alone. Wherever you stand on the issue, I have one thing to say: Social Security reform is not the solution.

Why? Because we started off asking the wrong question. Why are we asking about changing, or not changing, a government program that affects our retirement? Why aren't we taking control of our own retirement options? Wouldn't you and I be better off come retirement not depending on the government? The answer is yes. Unfortunately, no one is doing anything about it.

Most of the hardworking folks in this country have options through their jobs to participate in some sort of retirement plan like 401ks and IRAs. Yet few are participating in such programs. According to USA Today, "the saving rate was minus 0.4% last month, after bottoming at a minus 1.8% in August." Why are Americans not saving? In September alone consumer spending rose 0.5%. America is a nation full of hyperspenders (Thomas Stanley, The Millionaire Next Door). Simply, we spend all or more of our income and don't save.

In May, Forbes Magazine highlited an article, Retirement Doomsday by Dan Ackman, in which Ben Stein spoke out in regards to Social Security and our current retirement situation. Stein believes "this is the greatest crisis facing the country that people can do something about," but they're not. What's even more amazing is that it can be easily remedied. How? Start saving now.

Four ways to help us start saving today:

1. Make saving a priority. If it doesn't come off the top, you won't do it. You will only save money when it becomes very important!
   
2. Pay yourself first. Before you pay any bills or spend money, put 10% of your income into savings.
3. Give, save, then pay bills. Give to charity, non-profit groups or churches.
4. You must start now!

Compound Interest and What It Means To Your Retirement
The key to saving for retirement is discipline. We have to be consistent over time. This is a great example of compound interest at work:

Forty (40) years of saving $100 per month, every month, at 12% will build to $1,176,477.00

$100 per month is more than feasible for most Americans, so start saving today!

"In the house of the wise are stores of choice food and oil, but a foolish man devours all he has."
Proverbs 21:20 (NIV)